Technology has transformed financial trading for investors

by Staff Writer

13 Aug 2019 at 14:34hrs | Views

Whether you are a retail or institutional investor planning to buy equities, property, currencies, commodities or futures in the coming months, technology will play a vital role in your attempts to allocate capital and drive financial returns.

The internet has arguably been the most revolutionary and disruptive force in this process during the last two decades but even greater advancements lie in wait, with artificial intelligence, automation and augmented reality among the cutting edge tech set to transform investing once again.

The dawn of a new era of technologically powered trading first arrived more than three decades ago in 1986 with the Automated Quotation System, which enabled brokers to initiate and complete the purchase of stock quickly rather than conducting transactions face to face.

Former London Stock Exchange chief tech officer, Robin Paine stated: "It brought significant benefits to both institutional and private investors, with private investors gaining low-cost independent access to the market through the proliferation of new services."

That tech was largely limited to the trading floor but it was a sign of things to come. Online trading came to the fore several years later, breaking down barriers and democratising investment further. By the early 1990s, major brokerages were setting up platforms to enable individual investors to tap into a wealth of information including current prices and to buy and sell stocks with ease.

Technology also played a vital role in the evolution of communication, which opened up investments to people around the world. Before the internet was available, retail investors generally had to rely on physical financial literature and spreadsheet research to glean relevant data: the worldwide web changed that completely. Investors can now access the latest earnings reports via the Securities and Exchange Commission just seconds after they are posted. A treasure trove of financial information is at their fingertips.

The internet was the foundation for a number of new advances which transformed and shaped the investment process at an ever-growing pace. In today's world, there are web and desktop platforms, smartphones and mobile apps capable of managing the minutiae of trading. This tech is not just available to large corporations either, thus enabling a whole era of new investors to enter the markets.

This ease of use has also reduced the costs involved. It is now feasible for someone to set up a trading account, deposit funds and start trading via a completely operational hub within the hour. Every activity involved in trading and investment, which were once laborious, time-consuming and expensive, can now be completed with just a few clicks online.

TowerGroup analyst, Bob McDowall says tech has also enabled massive volumes of transactions to be completed. He notes: "Without technology, exchanges could not accommodate the increased transaction flows that are generated both by the proliferation of end investors, and by electronic trading, algorithms and low latency."

Academic studies have also espoused the virtues of the internet in terms of trading. A White Paper by the Wharton Business School stated the internet has brought about three main changes for investors. The first of these is greater transparency as a wider base of investors are now able to analyse big data and make their own conclusions about how securities should be priced.

However, even with access to a growing mass of data, most investment activities including forex trading require expert knowledge and the ability to make the right moves. If you are looking to enter the foreign exchange market, where daily trading volume now exceeds $5 trillion, you may still need expert assistance to get your investments off the ground. A forex broker will offer you access to a variety of trading instruments to help you on your quest to becoming a professional forex trader.

All of this digital age technology has also broken down the old order of brokers being people in power located in specific locations in first-world countries. The emergence of mobile devices, laptops and superfast broadband connections has made it possible for anyone, anywhere in the world, to open a trading account and build a successful career.

You don't even have to stay tethered to a workstation either as the portability of apps and online platforms have made it easier for a trader to arrange the sale of stocks or choose a currency pair and a type of FX trade. Long-term investments via equity crowdfunding and peer-to-peer lending have also been facilitated by streamlined marketplaces. Whatever the investment, technology has uprooted and overhauled the process, making it more accessible and easier for everyone to get involved and conduct day-to-day business.